Good Times Restaurants Reports Results for the 2024 Third Fiscal Quarter Ended June 25, 2024

Rhea-AI Summary

Good Times Restaurants (Nasdaq: GTIM) reported its Q3 2024 results with a 6.5% increase in total revenues to $37.9 million compared to Q3 2023.

Same Store Sales saw a growth of 1.2% for Bad Daddy’s and 5.8% for Good Times compared to the same quarter last year. The company reported a net income of $1.3 million and ended the quarter with $4.8 million in cash and $0.8 million in borrowings.

Good Times also repurchased 263,516 shares of its common stock. Key developments included the completion of a significant remodel, the rollout of a new point-of-sale system in multiple locations, and the acquisition and improvement of a franchisee-owned restaurant in Parker, Colorado.

CEO Ryan M. Zink highlighted the strong performance of both brands, new product introductions, and continued operational improvements, including a multi-faceted approach to creating value for shareholders through reinvestments and share repurchases.

Positive

• Total revenues increased by 6.5% to $37.9 million.
• Same Store Sales for Good Times increased by 5.8%.
• Net income attributable to common shareholders was $1.3 million.
• Company repurchased 263,516 shares of its common stock.
• Ended the quarter with $4.8 million in cash.

Negative

• Borrowings under the credit facility were $0.8 million.

Insights

Financial Analyst

As a financial analyst inspired by the incisive style of Michael Lewis, I find Good Times Restaurants' Q3 2024 results intriguing. The company's 6.5% revenue growth to $37.9 million is commendable, especially in the competitive restaurant industry. What's particularly noteworthy is the positive same-store sales across both brands, with Good Times restaurants showing a robust 5.8% increase.

The company's net income of $1.3 million is a solid performance, though without a year-over-year comparison, it's challenging to gauge the true progress. The balance sheet looks healthy with $4.8 million in cash and minimal borrowings of $0.8 million, indicating strong liquidity and financial flexibility.

What really catches my eye is the company's aggressive share repurchase program. Buying back 263,516 shares, including a significant private transaction, signals management's confidence in the company's value and future prospects. This move, combined with reinvestment in restaurant upgrades and technology, suggests a balanced approach to capital allocation.

However, investors should keep a close eye on the competitive pressures in the casual dining segment. The success of the new -time smashed patty burgers at Bad Daddy's is encouraging, but the need for such promotions hints at the challenges in maintaining market share and profitability in this space.

Overall, Good Times Restaurants seems to be navigating the post-pandemic landscape effectively, but the true test will be sustaining this momentum in the face of ongoing industry headwinds and economic uncertainties.

Market Research Analyst

Channeling the analytical prowess of Nate Silver, I see Good Times Restaurants' Q3 results as a microcosm of broader industry trends. The divergent performance between the company's two brands is particularly telling. Good Times' 5.8% same-store sales growth outpaces Bad Daddy's 1.2%, reflecting the current consumer preference for quick-service options over casual dining.

The success of the new smashed patty burgers at Bad Daddy's is a prime example of the industry's pivot towards value offerings without compromising quality. This trend is likely to persist as consumers grapple with inflationary pressures while still seeking dining-out experiences.

The company's investment in next-generation point-of-sale systems aligns with the broader industry shift towards technology-driven efficiency and improved customer experiences. This move could potentially drive further sales growth and operational improvements in the coming quarters.

However, the intensifying competition in the casual dining, burger-focused segment presents ongoing challenges. Bad Daddy's will need to continue innovating to maintain its market position, as evidenced by the need for drink specials and targeted discounting.

The acquisition of a franchisee-owned restaurant in Parker, Colorado and subsequent improvements demonstrate the company's commitment to quality control and brand consistency. This strategy could prove important in maintaining customer loyalty and driving long-term growth.

In conclusion, Good Times Restaurants' performance reflects the broader industry's recovery and adaptation to post-pandemic consumer behaviors. The company's balanced approach to innovation, value creation and operational improvements positions it well in a challenging market landscape.

Tech Expert

As a tech expert with the analytical acumen of Walt Mossberg, I'm particularly intrigued by Good Times Restaurants' rollout of their next-generation point-of-sale (POS) system. This technological upgrade is more than just a routine update; it's a strategic move that could significantly impact the company's operations and customer experience.

The rapid transition from pilot phase to rollout is impressive. Nineteen locations already have the new system, with the remaining company-owned locations set to be completed within four weeks. This swift implementation suggests the system has delivered clear benefits and minimal disruption.

While specific details about the POS system aren't provided, next-gen systems typically offer features like:

• Enhanced data analytics for better inventory management and sales forecasting
• Improved integration with online ordering and delivery platforms
• More efficient order processing, potentially reducing wait times
• Better customer relationship management capabilities

The planned installation of digital menu boards at the acquired Parker, Colorado location is another tech-forward move. Digital menus allow for dynamic pricing, easy updates for promotions and can enhance the overall customer experience.

These technological investments position Good Times Restaurants well in an increasingly digital-first industry. However, the true test will be in how effectively the company leverages these tools to drive operational efficiencies and enhance customer engagement. The coming quarters will be important in determining the ROI of these tech investments and their impact on the bottom line.

08/01/2024 - 04:05 PM

DENVER--(BUSINESS WIRE)-- Good Times Restaurants Inc. (Nasdaq: GTIM), operator of the Bad Daddy’s Burger Bar and Good Times Burgers & Frozen Custard restaurant brands, today reported financial results for the 2024 third fiscal quarter.

Key highlights of the Company’s financial results include:

• Total Revenues for the quarter increased 6.5% to $37.9 million compared to the third quarter of fiscal 2023
• Same Store Sales¹ for company-owned Bad Daddy’s restaurants increased 1.2% for the quarter compared to the third quarter of fiscal 2023
• Same Store Sales for company-owned Good Times restaurants increased 5.8% for the quarter compared to the third quarter of fiscal 2023
• Net Income Attributable to Common Shareholders was $1.3 million for the quarter
• The Company ended the quarter with $4.8 million in cash and $0.8 million of borrowings under its credit facility with Cadence Bank
• The Company repurchased 263,516 shares of its common stock during the quarter, including approximately 171,000 shares in a privately negotiated purchase

Ryan M. Zink, the Company’s Chief Executive Officer, said, “The Good Times brand produced strong same store sales again this quarter, and we are extremely pleased with the bottom line results the concept continues to generate. During the quarter, we accomplished several significant reinvestment milestones including completion of our fourth remodel, this one much more extensive, including structural repairs. The restaurant was closed for nearly six weeks during construction. Additionally, as previously reported, in April we began the pilot phase of our next-generation point-of-sale system. We quickly realized the benefits of this new system, assessed the test results, addressed minor issues, and moved to the rollout phase of the project and as of the end of July, the system has been installed in nineteen locations, with seven Company-owned locations yet to be installed. Those restaurants will be completed within the next four weeks, with our Denver-area franchise restaurants expected to be converted shortly thereafter. We also acquired a franchisee-owned restaurant in Parker, Colorado during the quarter, and made quick improvements to the facility, including new awnings, overhauled the parking lot and landscaping, and have both digital menu boards and new signage scheduled for installation.”

Mr. Zink continued, “I am also thrilled with the improvement in same store sales at Bad Daddy’s, with positive same store sales for the quarter. We have continued the trend of improved performance compared to the Black Box casual dining benchmark. Competition in the casual dining, burger-focused segment continues to be intense as our guests look for value through reasonable prices without compromises on service, quality, or portions. While we continue to look to creating value through drink specials and targeted discounting, late in the quarter we introduced new limited time burgers featuring quarter-pound, smashed patties. These burgers were an immediate success, and we had to dip into reserve stock and quickly recover as purchase velocity was more than double our expectation. Though this product offering is currently slated to end post-Labor Day, we expect these burgers to return and likely will have a permanent place on Bad Daddy’s menu. As foodies at heart, our operators are focused on cooking up unique, indulgent burger builds, coupled with an inviting and engaging experience that differentiates Bad Daddy’s from others in casual dining and delivers on the value expectations of our guests.”

“In addition to our concept-level initiatives, we have continued to focus on a multi-faceted approach to creating value, including share repurchases. In addition to our share repurchase program, during the quarter we completed a privately negotiated share repurchase bringing the total shares repurchased during the quarter to approximately 264,000 shares. At the same time, the cash generated by the business enabled us to complete that purchase, continue reinvesting in our restaurants, reduce our already limited borrowings on our credit facility, with sequential quarterly growth in ending cash reserves. I believe our operations and capabilities leaders are focused on creating enjoyable and memorable experiences for our guests through excellent restaurant operations and authentic, genuine hospitality, and that in doing so, we grow the value of our brands and operations for our shareholders,” Zink concluded.

Conference Call: Management will host a conference call to discuss its third quarter 2024 financial results on Thursday, August 1, 2024 at 3:00 p.m. MT/5:00 p.m. ET. Hosting the call will be Ryan M. Zink, its Chief Executive Officer and Keri A. August, its Senior Vice President of Finance and Accounting.

The conference call can be accessed live over the phone by dialing (888) 210-2831, conference ID: 3024033. The conference call will also be webcast live from the Company's corporate website www.goodtimesburgers.com. An archive of the webcast will be available at the same location on the corporate website shortly after the call has concluded.

Good Times Restaurants Inc. (Nasdaq: GTIM)

Good Times Restaurants Inc. owns, operates, and licenses 41 Bad Daddy’s Burger Bar restaurants through its wholly owned subsidiaries. Bad Daddy’s Burger Bar is a full-service “small box” restaurant concept featuring a chef-driven menu of gourmet signature burgers, chopped salads, appetizers and sandwiches with a full bar and a focus on a selection of craft beers in a high-energy atmosphere that appeals to a broad consumer base. Additionally, through its wholly owned subsidiaries, Good Times Restaurants Inc. owns, operates and franchises 31 Good Times Burgers & Frozen Custard restaurants primarily in Colorado. Good Times is a regional quick-service concept featuring 100% all-natural burgers and chicken sandwiches, signature wild fries, green chili breakfast burritos and fresh frozen custard desserts.

Forward Looking Statements

This press release contains forward looking statements within the meaning of federal securities laws. The words “intend,” “may,” “believe,” “will,” “should,” “anticipate,” “expect,” “seek”, “plan” and similar expressions are intended to identify forward looking statements. These statements involve known and unknown risks, which may cause the Company’s actual results to differ materially from results expressed or implied by the forward-looking statements. Such risks and uncertainties include, among other things, the market price of the Company's stock prevailing from time to time, the nature of other investment opportunities presented to the Company, the disruption to our business from pandemics and other public health emergencies, the impact and duration of staffing constraints at our restaurants, the impact of supply chain constraints and the current inflationary environment, the uncertain nature of current restaurant development plans and the ability to implement those plans and integrate new restaurants, delays in developing and opening new restaurants because of weather, local permitting or other reasons, increased competition, cost increases or shortages in raw food products, other general economic and operating conditions, risks associated with the acquisition of additional restaurants, the adequacy of cash flows and the cost and availability of capital or credit facility borrowings to provide liquidity, changes in federal, state, or local laws and regulations affecting the operation of our restaurants, including minimum wage and tip credit regulations, and other matters discussed under the Risk Factors section of Good Times’ Annual Report on Form 10-K for the fiscal year ended September 26, 2023 filed with the SEC, and other filings with the SEC.

Category: Financial

Good Times Restaurants Inc.
Unaudited Supplemental Information
(In thousands, except per share amounts)
	Quarter Ended (13 weeks)								Year-to-Date (39 weeks)
	June 25, 2024				June 27, 2023				June 25, 2024				June 27, 2023
NET REVENUES:
Restaurant sales	$	37,742			$	35,376			$	105,953			$	103,123
Franchise revenues		200				256				568				706
Total net revenues		37,942				35,632				106,521				103,829
RESTAURANT OPERATING COSTS:
Food and packaging costs		11,698				10,923				32,624				32,185
Payroll and other employee benefit costs		12,635				11,940				36,525				35,477
Restaurant occupancy costs		2,580				2,432				7,698				7,318
Other restaurant operating costs		5,195				4,811				15,028				14,129
Pre-opening costs		-				80				-				110
Depreciation and amortization		960				919				2,813				2,740
Total restaurant operating costs		33,068				31,105				94,688				91,959
General and administrative costs		2,680				2,377				7,791				7,070
Advertising costs		749				751				2,665				2,423
Impairment of long-lived assets		199				965				199				1,041
Loss (gain) on restaurant and equipment asset sale		18				(10	)			12				(32	)
Litigation contingencies		-				-				(332	)			-
INCOME FROM OPERATIONS:		1,228				444				1,498				1,368
Interest and other expense, net		(27	)			(18	)			(101	)			(56	)
NET INCOME BEFORE INCOME TAXES:		1,201				426				1,397				1,312
Provision for income taxes		197				551				198				10,503
NET INCOME:		1,398				977				1,595				11,815
Income attributable to non-controlling interests		(77	)			(135	)			(212	)			(479	)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	1,321			$	842			$	1,383			$	11,336
NET INCOME PER SHARE, ATTRIBUTABLE TO COMMON SHAREHOLDERS:
Basic	$	0.12			$	0.07			$	0.12			$	0.96
Diluted	$	0.12			$	0.07			$	0.12			$	0.95
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		10,933,758				11,700,044				11,149,181				11,853,441
Diluted		11,034,487				11,769,286				11,246,353				11,910,491

Good Times Restaurants Inc. Unaudited Supplemental Information (In thousands)
Balance Sheet Data	June 25, 2024					September 26, 2023
Cash and cash equivalents		$	4,819				$	4,182
Current assets		$	7,709				$	6,521
Total assets		$	90,077				$	91,088
Current liabilities		$	16,543				$	14,890
Shareholders’ equity		$	33,018				$	32,994

Supplemental Information for Company-Owned Restaurants (dollars in thousands):
	Bad Daddy’s Burger Bar												Good Times Burgers & Frozen Custard
	Third Quarter (13 weeks)						Year-to-Date (39 weeks)						Third Quarter (13 weeks)						Year-to-Date (39 weeks)
		2024			2023			2024			2023			2024			2023			2024			2023
Restaurant sales	$	27,327		$	26,085		$	77,896		$	77,592		$	10,415		$	9,291		$	28,057		$	25,531
Restaurants open at beginning of period		40			39			40			40			25			23			25			23
Restaurants opened or acquired during period		-			-			-			-			1			-			1			-
Restaurants closed during period		-			-			-			1			-			-			-			-
Restaurants open at period end		40			39			40			39			26			23			26			23
Restaurant operating weeks		520.0			504.0			1560.0			1530.5			324.5			299.0			974.5			897.0
Average weekly sales per restaurant	$	52.6		$	51.8		$	49.9		$	50.7		$	32.1		$	31.1		$	28.8		$	28.5

Reconciliation of Non-GAAP Measurements to U.S. GAAP Results
Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Income from Operations
(In thousands, except percentage data)
	Bad Daddy’s Burger Bar												Good Times Burgers & Frozen Custard												Good Times Restaurants Inc.
	-------------------------------------Quarter Ended (13 Weeks)-------------------------------------
	June 25, 2024						June 27, 2023						June 25, 2024						June 27, 2023						June 25, 2024			June 27, 2023
Restaurant sales	$	27,327		100.0	%		$	26,085		100.0	%		$	10,415		100.0	%		$	9,291		100.0	%		$	37,742		$	35,376
Restaurant operating costs (exclusive of depreciation and amortization and preopening, shown separately below):
Food and packaging costs		8,517		31.2	%			8,106		31.1	%			3,181		30.5	%			2,817		30.3	%			11,698			10,923
Payroll and benefits costs		9,227		33.8	%			9,054		34.7	%			3,408		32.7	%			2,886		31.1	%			12,635			11,940
Restaurant occupancy costs		1,727		6.3	%			1,700		6.5	%			853		8.2	%			732		7.9	%			2,580			2,432
Other restaurant operating costs		3,945		14.4	%			3,750		14.4	%			1,250		12.0	%			1,061		11.4	%			5,195			4,811
Restaurant-level operating profit	$	3,911		14.3	%		$	3,475		13.3	%		$	1,723		16.5	%		$	1,795		19.3	%		$	5,634		$	5,270
Franchise revenues																										200			256
Deduct - Other operating:
Depreciation and amortization																										960			919
General and administrative																										2,680			2,377
Advertising costs																										749			751
Impairment of long-lived assets																										199			965
Loss (gain) on restaurant and equipment asset sales																										18			(10	)
Pre-opening costs																										-			80
Total other operating																										4,606			5,082
Income from operations																									$	1,228		$	444

Certain percentage amounts in the table above may not total due to rounding as well as the fact that restaurant operating costs are expressed as a percentage of restaurant revenues (as opposed to total revenues).

Reconciliation of Non-GAAP Measurements to U.S. GAAP Results
Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Income (Loss) from Operations
(In thousands, except percentage data)
	Bad Daddy’s Burger Bar												Good Times Burgers & Frozen Custard												Good Times Restaurants Inc.
	--------------------------------Year-to-Date Period Ended (39 weeks)--------------------------------
	June 25, 2024						June 27, 2023						June 25, 2024						June 27, 2023						June 25, 2024				June 27, 2023
Restaurant sales	$	77,896		100.0	%		$	77,592		100.0	%		$	28,057		100.0	%		$	25,531		100.0	%		$	105,953			$	103,123
Restaurant operating costs (exclusive of depreciation and amortization, and preopening, shown separately below:
Food and packaging costs		24,156		31.0	%			24,131		31.1	%			8,468		30.2	%			8,054		31.5	%			32,624				32,185
Payroll and benefits costs		27,040		34.7	%			26,951		34.7	%			9,485		33.8	%			8,526		33.4	%			36,525				35,477
Restaurant occupancy costs		5,188		6.7	%			5,124		6.6	%			2,510		8.9	%			2,194		8.6	%			7,698				7,318
Other restaurant operating costs		11,421		14.7	%			11,084		14.3	%			3,607		12.9	%			3,045		11.9	%			15,028				14,129
Restaurant-level operating profit	$	10,091		13.0	%		$	10,302		13.3	%		$	3,987		14.2	%		$	3,712		14.5	%		$	14,078			$	14,014
Franchise revenues																										568				706
Deduct - Other operating:
Depreciation and amortization																										2,813				2,740
General and administrative																										7,791				7,070
Advertising costs																										2,665				2,423
Litigation contingencies																										(332	)			-
Impairment of long-lived assets																										199				1,041
Loss (gain) on restaurant and equipment asset sales																										12				(32	)
Pre-opening costs																										-				110
Total other operating																										13,148				13,352
Income from operations																									$	1,498			$	1,368

Certain percentage amounts in the table above may not total due to rounding as well as the fact that restaurant operating costs are expressed as a percentage of restaurant revenues (as opposed to total revenues).

The Company believes that restaurant-level operating profit is an important measure for management and investors because it is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance. The Company defines restaurant-level operating profit to be restaurant revenues minus restaurant-level operating costs, excluding restaurant closures and impairment costs. The measure includes restaurant-level occupancy costs, which include fixed rents, percentage rents, common area maintenance charges, real estate and personal property taxes, general liability insurance and other property costs, but excludes depreciation. The measure excludes depreciation and amortization expense, substantially all of which is related to restaurant level assets, because such expenses represent historical sunk costs which do not reflect current cash outlay for the restaurants. The measure also excludes selling, general and administrative costs, and therefore excludes occupancy costs associated with selling, general and administrative functions, and pre-opening costs. The Company excludes restaurant closure costs as they do not represent a component of the efficiency of continuing operations. Restaurant impairment costs are excluded, because, like depreciation and amortization, they represent a non-cash charge for the Company’s investment in its restaurants and not a component of the efficiency of restaurant operations. Restaurant-level operating profit is not a measurement determined in accordance with generally accepted accounting principles (“GAAP”) and should not be considered in isolation, or as an alternative, to income from operations or net income as indicators of financial performance. Restaurant-level operating profit as presented may not be comparable to other similarly titled measures of other companies. The tables above set forth certain unaudited information for the current and prior year fiscal quarters and year-to-date periods for fiscal 2024 and fiscal 2023, expressed as a percentage of total revenues, except for the components of restaurant operating costs, which are expressed as a percentage of restaurant revenues.

Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA (Thousands of US Dollars)
	Quarter Ended (13 weeks)								Year-to-Date (39 weeks)
	June 25, 2024				June 27, 2023				June 25, 2024				June 27, 2023
Adjusted EBITDA2:
Net Income, as reported	$	1,321			$	842			$	1,383				11,336
Depreciation and amortization		959				924				2,817				2,691
Interest expense, net		27				18				101				56
Provision for income taxes		(197	)			(551	)			(198	)			(10,503	)
EBITDA		2,110				1,233				4,103				3,580
Preopening expense		-				80				-				110
Non-cash stock-based compensation		28				15				106				104
Asset Impairment		199				965				199				1,041
GAAP rent-cash rent difference		(211	)			(135	)			(537	)			(450	)
Loss (gain) on restaurant and equipment asset sales		18				(10	)			12				(32	)
Litigation contingencies		-				-				(332	)			-
Adjusted EBITDA	$	2,144			$	2,148			$	3,551			$	4,353

Adjusted EBITDA is a supplemental measure of operating performance that does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by GAAP, and our calculation thereof may not be comparable to that reported by other companies. This measure is presented because we believe that investors' understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for evaluating our ongoing results of operations.

Adjusted EBITDA is calculated as net income before interest expense, provision for income taxes and depreciation and amortization and further adjustments to reflect the additions and eliminations presented in the table above.

Adjusted EBITDA is presented because: (i) we believe it is a useful measure for investors to assess the operating performance of our business without the effect of non-cash charges such as depreciation and amortization expenses and asset disposals, closure costs and restaurant impairments, and (ii) we use Adjusted EBITDA internally as a benchmark for certain of our cash incentive plans and to evaluate our operating performance or compare our performance to that of our competitors. The use of Adjusted EBITDA as a performance measure permits a comparative assessment of our operating performance relative to our performance based on our GAAP results, while isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. Companies within our industry exhibit significant variations with respect to capital structures and cost of capital (which affect interest expense and income tax rates) and differences in book depreciation of property, plant and equipment (which affect relative depreciation expense), including significant differences in the depreciable lives of similar assets among various companies. Our management believes that Adjusted EBITDA facilitates company-to-company comparisons within our industry by eliminating some of these foregoing variations. Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies, and our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by excluded or unusual items.

_________________________

¹ Same store sales are a metric used in evaluating the performance of established restaurants and is a commonly used metric in the restaurant industry. Same store sales for our brands are calculated using all units open for at least 18 full fiscal months and use the comparable operating weeks from the prior year to the current year quarter’s operating weeks.

² Depreciation and amortization, the difference between GAAP rent and cash rent and the loss (gain) on restaurant and equipment asset sales have been reduced by any amounts attributable to non-controlling interests.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240801501352/en/

GOOD TIMES RESTAURANTS INC. CONTACTS:

Ryan M. Zink, Chief Executive Officer (303) 384-1432

Christi Pennington (303) 384-1440

Source: Good Times Restaurants Inc.

FAQ

What were the total revenues for Good Times Restaurants in Q3 2024?

Good Times Restaurants reported total revenues of $37.9 million for Q3 2024, a 6.5% increase compared to Q3 2023.

How did Same Store Sales perform for Good Times Restaurants in Q3 2024?

Same Store Sales for Bad Daddy’s increased by 1.2% and for Good Times increased by 5.8% in Q3 2024 compared to the same quarter last year.

What was Good Times Restaurants' net income in Q3 2024?

Good Times Restaurants reported a net income of $1.3 million in Q3 2024.

How many shares did Good Times Restaurants repurchase in Q3 2024?

Good Times Restaurants repurchased 263,516 shares of its common stock in Q3 2024.

What is the cash balance for Good Times Restaurants at the end of Q3 2024?

Good Times Restaurants ended Q3 2024 with $4.8 million in cash.